For typical individuals looking to hold bitcoin in self-custody, there are a number of tools to choose from. Depending on the situation, a simple singlesig wallet could be sufficient, with the option to add modifications such as seed phrase copying or BIP 39 passphrases. We created an article going into detail on various configurations, comparing their strengths and weaknesses. 

Individuals less concerned with making frequent withdrawals, and looking to secure larger amounts for long-term savings, should consider a multisig wallet. Multisig offers threshold security, which can protect users from single points of failure, ensuring that no funds are lost if any one component of the setup is destroyed, misplaced, or stolen. Achieving threshold security is crucial for anyone who wishes to protect a substantial amount of funds.

Custody for institutions

For companies, governments and other institutions who want to secure a bitcoin treasury, it wouldn’t be appropriate to employ some of the custody strategies used by typical individuals. If multiple people are responsible for large sums of money, more rigorous controls are necessary. Institutional-grade bitcoin custody requires threshold security as a bare minimum.

Multisig, SSS, and MPC are the available choices to meet that requirement. While MPC is by far the most complicated to safely use, and wouldn’t be recommended for individuals, an institution with a team of experts might consider it. However, the extra effort to set up MPC doesn’t mean that it’s a superior option to basic multisig. All three models have trade offs, as discussed in our earlier article comparing them.

If an institution wants the highest level of security possible, they should consider using multi-level thresholds. In this arrangement, the foundation is multisig, which allows for a threshold of multiple separate private keys in order to access funds. Several different enterprise key agents can be responsible for each key, minimizing counterparty risk from any single custodian. Additionally, each key agent can apply their own threshold security for the key they are responsible for, by using SSS or MPC. This protects the key from any single officer within the key agent firm.